1Password 8 - Safari Extension

The purpose of the extension is to put that little widget in the username and password fields within the web site page. That provides the ability to fill in the data in those fields directly. If it is not allowed, it can't do that.

Once you allow it, you can then click on Edit Websites on that Extension Preferences pane. If you like, you can set the default to be Deny and explicitly list each web site where you want the 1password extension functionality to be allowed. Although that is probably too tedious. Or you could specifically deny the extension only on those sites you might consider too confidential for 1password to have any possible access to page content. Then allow all others.